Should Taxpayers Subsidize Sports Stadiums?

My colleague Pat Garofalo and I have written extensively about cities, states, and professional sports franchises that have asked taxpayers to subsidize new arenas and stadiums, and whether it’s a good idea for local taxpayers — who usually double as the team’s fans — to foot the bill. Today, Pat and I wrote a piece for The Atlantic magazine’s business page in which we examined the case of Jobing.com Arena in Glendale, Arizona, the home of the bankrupt Phoenix Coyotes hockey franchise.

You can read the whole piece here, but I wanted to highlight one quote from economist Victor Matheson, who has studied the economics of sports stadiums and has pushed back on the notion that the facilities drive so much economic growth that they pay for themselves:

“The basic idea is that sports stadiums typically aren’t a good tool for economic development,” said Victor Matheson, an economist at Holy Cross who has studied the economic impact of stadium construction for decades. When cities cite studies (often produced by parties with an interest in building the stadium) touting the impact of such projects, there is a simple rule for determining the actual return on investment, Matheson said: “Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that’s a pretty good estimate of the actual economic impact.”

The main problem, I think, with the public financing of sports stadiums isn’t that they happen, but that they happen so often because of how they are sold to taxpayers. Developers, team owners, and other interested parties love to sell stadiums as a major economic investment that will spur so much growth that they will ultimately pay for themselves. But as Matheson and other economists told us for the piece, that simply isn’t the case. These stadiums come at a huge cost, and the public money that is spent on them is diverted from funds that would otherwise pay for public services — firefighters, police officers, public pensions, roads and bridges, or any number of things that we use but don’t notice in everyday life.

If taxpayers knew the real cost of stadiums, they might choose to keep paying for police officers, firefighters, and other public services instead of spending $4 billion on professional sports facilities. Or maybe they wouldn’t. Maybe fandom is such that we would still prioritize a sparkling new arena or stadium even while we’re cutting those services. The point is, we don’t know, because we never get that discussion.